The Bank of Israel and the Association of Banks in Israel are formulating rules for activity with Palestinian banks. Last week, representatives of the Banking Supervision Department and commercial banks met Palestinian Monetary Authority director Riad Mustafa Abu Shahada and representatives of Arab banks operating in the Palestinian Authority to discuss the effect of certain clauses of an anti-money laundering ordinance, which is coming into effect.
Israeli commercial banks have reduced or suspended activity altogether with their Palestinian counterparts in order to avoid breaches in the Prohibition of Money Laundering Law (5760-2000) and the cabinet decision in October 2007 to declare the Gaza Strip "hostile territory".
The Palestinian bankers raised the issue of the increase in cases in which Israeli banks return checks with no explanation. The Palestinians asked that the reasons for returning checks be specified. The Israeli bankers said that reasons were given for almost all cases of returned checks, and that they often received checks drawn on Palestinians banks with additional text written on them, raising concern about the checks' veracity.
A senior Bank of Israel official said, "The meeting was intended to reduce the possibility of money laundering. The Palestinian Authority is make a great effort to comply with the regulations, and formulated a number of rules that they are supposed to comply with." The official added that the parties were discussing temporary arrangements until a permanent arrangement was formulated through the Postal Bank.
Published by Globes [online], Israel business news - www.globes-online.com - on April 13, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008